Unlisted Property Trusts in Australia: 2025 Guide for Investors

Australia’s property obsession shows no sign of slowing, but savvy investors are looking beyond traditional bricks and mortar. Unlisted property trusts—poised between direct ownership and listed REITs—are increasingly the instrument of choice for those seeking reliable returns and lower volatility. In 2025, with public markets swinging and inflation still a hot topic, these trusts have emerged as a quiet powerhouse in the nation’s investment landscape.

What Are Unlisted Property Trusts?

Unlisted property trusts are collective investment vehicles that pool funds from multiple investors to acquire, manage, and sometimes develop commercial properties. Unlike listed property trusts (REITs), they aren’t traded on the ASX, so their unit prices aren’t exposed to daily share market fluctuations. Investors instead buy and sell units through the fund manager, often with set entry and exit windows.

• Illiquidity: They typically require a multi-year investment horizon (often 5–7 years), making them better suited to patient capital.

• Income Focus: Most target regular distributions, derived from rental income on assets such as office towers, retail centres, industrial warehouses, or healthcare facilities.

• Diversification: Investors can access a portfolio of properties, reducing risk compared to buying a single asset.

Why Interest Is Surging in 2025

Recent years have seen a marked uptick in unlisted property trust launches and inflows. Several trends are driving this momentum in 2025:

• Market Volatility: With global share markets swinging in response to economic and geopolitical uncertainty, unlisted property trusts offer a shelter from daily price gyrations.

• Yield Appeal: As interest rates stabilise after the RBA’s 2024 tightening cycle, term deposit rates have levelled off. Unlisted property trusts, on the other hand, are still delivering attractive yields—often 6–8% per annum—thanks to strong tenant demand in logistics, healthcare, and some office sectors.

• Tax Efficiency: Many trusts pay distributions that include tax-deferred components, appealing to high-income investors and SMSFs.

• Property Market Resilience: Despite concerns about retail and office space, industrial property (especially logistics hubs and data centres) remains in demand due to e-commerce growth and supply chain transformation.

Key Risks and Considerations

While unlisted property trusts offer compelling benefits, they aren’t for everyone. Here’s what investors should watch in 2025:

• Liquidity Constraints: Most trusts have fixed investment terms. Early exit may not be possible or could come at a discount, so capital should be genuinely long-term.

• Valuation Frequency: Because units aren’t priced daily, valuations are periodic (often quarterly). This smooths volatility but can mask real-time shifts in property values.

• Manager Quality: The performance of an unlisted trust depends heavily on the manager’s expertise in asset selection, leasing, and tenant management. Due diligence is crucial—look for transparent reporting, solid track records, and alignment of interests.

• Interest Rate Sensitivity: Property values and borrowing costs are sensitive to interest rates. While the RBA has signalled a pause in rate hikes for 2025, any unexpected increases could affect returns and capital values.

For example, Charter Hall Direct Industrial Fund No.4, one of Australia’s largest unlisted industrial trusts, weathered the 2022–2023 rate rises by maintaining high occupancy and long lease terms. This kind of active management is vital as the property cycle evolves.

Who Should Consider Unlisted Property Trusts?

Unlisted property trusts are a strong fit for:

• SMSF trustees seeking stable, tax-efficient income

• High net worth individuals wanting diversification without direct property headaches

• Investors comfortable with illiquidity and multi-year investment horizons

Entry minimums typically range from $10,000 to $100,000, and many trusts are open to retail investors. However, thorough research and professional advice are recommended to match trust characteristics with your goals and risk profile.

2025 Regulatory and Market Updates

The Australian Securities and Investments Commission (ASIC) has increased its scrutiny of unlisted property trusts in 2025, focusing on disclosure standards and liquidity risk. New guidelines require clearer communication about withdrawal rights and regular updates on underlying asset values. This should strengthen investor protections and transparency across the sector.

Meanwhile, the government’s ongoing push for more institutional investment in build-to-rent and affordable housing is likely to see more specialised unlisted trusts in these areas, expanding options for socially conscious investors.

Conclusion: Are Unlisted Property Trusts Right for You?

Unlisted property trusts are no longer the preserve of institutional players—they’re a mainstream option for Australians looking to blend income, diversification, and stability in their portfolios. In a world where volatility is the new normal, these trusts offer a way to harness the enduring value of property without riding the daily rollercoaster of listed markets.